Marygold Companies, Inc. 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Our financial statements appear as follows: Report of Independent Registered Public Accounting Firm. BPM San Francisco, CA. (Firm ID No. 207 ) F-1 Consolidated Balance Sheets F-2 Consolidated Statements of Operations F-3 Consolidated Statements of Comprehensive (Loss) Income F-4 Consolidated Statements of Stockholders’ Equity F-5 Consolidated Statements of Cash Flows F-6 Notes to Consolidated Financial Statements F-7 26 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of The Marygold Companies, Inc. and Subsidiaries Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of The Marygold Companies, Inc. (the “Company”) as of June 30, 2024 and 2023, and the related consolidated statements of operations, comprehensive (loss) income, stockholders’ equity, and cash flows for each of the years in the two-year period ended June 30, 2024, and the related notes (collectively referred to as “the consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2024 and 2023, and the results of its operations and its cash flows for each of the years in the two-year period ended June 30, 2024, in conformity with accounting principles generally accepted in the United States of America. Basis of opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee of the Board of Directors and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates. Description of the Matter As described in Note 14, Commitments and Contingencies, of the consolidated financial statements, the Company is party to various legal proceedings and regulatory inquiries. The Company discloses the legal proceedings and that no accrual has been recorded with respect to them as of June 30, 2024. The Company further discloses that it is currently unable to predict the timing or outcome of, or reasonably estimate the possible losses or range of possible losses resulting from these matters, and that it is reasonably possible that this estimate will change in the near term. The Company discloses that an adverse outcome regarding these matters could materially adversely affect the Company’s financial condition, results of operations and cash flows. Auditing the Company’s accounting for, and disclosure of, loss contingencies related to the various legal proceedings was especially challenging due to the significant judgement required to evaluate management’s assessment of the likelihood of a loss, and of the potential amount or range of such loss. How We Addressed the Matter in Our Audit To test the Company’s assessment of the probability of incurrence of a loss, whether the loss was reasonably estimable, and the conclusion and disclosures regarding any range of possible losses, including when the Company believes such a range cannot be reasonably estimated at this time, we read the minutes or a summary of the meetings of the Board of Directors, requested and received internal and external legal counsel confirmations letters, discussed with legal counsel the nature of the various matters and obtained representations from management. We also evaluated the appropriateness of the related disclosures included in Note 14, Commitments and Contingencies, to the consolidated financial statements. /s/ BPM LLP We have served as the Company’s auditor since 2017. San Francisco, California September 18, 2024 F- 1 Table of Contents THE MARYGOLD COMPANIES, INC. CONSOLIDATED BALANCE SHEETS (in thousands, except per share data) June 30, 2024 June 30, 2023 ASSETS CURRENT ASSETS Cash and cash equivalents $ 5,461 $ 8,161 Accounts receivable, net (of which $ 1,455 and $ 1,674 , respectively, due from related parties) 2,678 3,026 Inventories 2,191 2,254 Prepaid income tax and tax receivable 1,338 992 Investments, at fair value 9,551 11,481 Other current assets 3,034 904 Total current assets 24,253 26,818 Restricted cash 62 425 Property and equipment, net 1,166 1,255 Operating lease right-of-use asset 974 821 Goodwill 2,481 2,307 Intangible assets, net 1,375 2,330 Deferred tax assets, net 1,969 771 Other assets 619 554 Total assets $ 32,899 $ 35,281 LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES Accounts payable and accrued expenses $ 4,021 $ 2,771 Operating lease liabilities, current portion 602 457 Purchase consideration payable 277 605 Loans - property and equipment, current portion 333 359 Total current liabilities 5,233 4,192 Loans - property and equipment, net of current portion 70 88 Purchase consideration payable, net of current portion 237 - Operating lease liabilities, net of current portion 385 381 Deferred tax liabilities, net 360 242 Total long-term liabilities 1,052 711 Total liabilities 6,285 4,903 STOCKHOLDERS’ EQUITY Preferred stock, $ 0.001 par value; 50,000 shares authorized; Series B: 49 shares issued and outstanding at both June 30, 2024 and 2023 - - Common stock, $ 0.001 par value; 900,000 shares authorized; 40,096 and 39,383 shares issued and outstanding at June 30, 2024 and 2023, respectively 40 39 Additional paid-in capital 12,825 12,397 Accumulated other comprehensive loss ( 269 ) ( 145 ) Retained earnings 14,018 18,087 Total stockholders’ equity 26,614 30,378 Total liabilities and stockholders’ equity $ 32,899 $ 35,281 The accompanying notes are an integral part of these consolidated financial statements. F- 2 Table of Contents THE MARYGOLD COMPANIES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) 2024 2023 Year Ended June 30, 2024 2023 Revenue Fund management - related party $ 18,965 $ 20,862 Food products 7,271 7,632 Beauty products 3,296 3,033 Security systems 2,655 2,833 Financial services 649 517 Revenue 32,836 34,877 Cost of revenue 8,720 8,751 Gross profit 24,116 26,126 Operating expense Salaries and compensation 11,150 10,042 General and administrative expense 8,942 7,076 Fund operations 5,154 4,387 Marketing and advertising 3,152 2,624 Impairment loss 1,389 - Depreciation and amortization 585 577 Total operating expenses 30,372 24,706 (Loss) income from operations ( 6,256 ) 1,420 Other income (expense): Interest and dividend income 756 275 Interest expense ( 16 ) ( 20 ) Other income (expense), net 68 ( 81 ) Total other income (expense), net 808 174 (Loss) income before income taxes ( 5,448 ) 1,594 Benefit (provision) of income taxes 1,379 ( 429 ) Net (loss) income $ ( 4,069 ) $ 1,165 Weighted average shares of common stock Basic 40,396 40,371 Diluted 40,396 40,404 Net (loss) income per common share Basic $ ( 0.10 ) $ 0.03 Diluted $ ( 0.10 ) $ 0.03 The accompanying notes are an integral part of these consolidated financial statements. F- 3 Table of Contents THE MARYGOLD COMPANIES, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (in thousands) June 30, 2024 June 30, 2023 Year Ended June 30, 2024 2023 Net (loss) income $ ( 4,069 ) $ 1,165 Foreign currency translation (loss) gain ( 124 ) 89 Comprehensive (loss) income $ ( 4,193 ) $ 1,254 The accompanying notes are an integral part of these consolidated financial statements. F- 4 Table of Contents THE MARYGOLD COMPANIES, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (in thousands, except per share data) Period Ending June 30, 2024 Number of Shares Amount Number of Shares Par Value Paid - in Capital Comprehensive Income (Loss) Retained Earnings Stockholders’ Equity Preferred Stock (Series B) Common Stock Additional Accumulated Other Total Number of Shares Amount Number of Shares Par Value Paid - in Capital Comprehensive Income (Loss) Retained Earnings Stockholders’ Equity Balance at July 1, 2022 49 $ - 39,383 $ 39 $ 12,313 $ ( 234 ) $ 16,922 $ 29,040 Gain on currency translation - - - - - 89 - 89 Stock-based compensation - - - - 84 - - 84 Net income - - - - - - 1,165 1,165 Balance at June 30, 2023 49 - 39,383 39 12,397 ( 145 ) 18,087 30,378 Balance 49 - 39,383 39 12,397 ( 145 ) 18,087 30,378 Issuance of restricted stock awards - - 713 1 - - - 1 Loss on currency translation - - - - - ( 124 ) - ( 124 ) Stock-based compensation - - - - 428 - - 428 Net loss - - - - - - ( 4,069 ) ( 4,069 ) Net income (loss) - - - - - - ( 4,069 ) ( 4,069 ) Balance at June 30, 2024 49 $ - 40,096 $ 40 $ 12,825 $ ( 269 ) $ 14,018 $ 26,614 Balance 49 $ - 40,096 $ 40 $ 12,825 $ ( 269 ) $ 14,018 $ 26,614 The accompanying notes are an integral part of these consolidated financial statements. F- 5 Table of Contents THE MARYGOLD COMPANIES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) 2024 2023 Year Ended June 30, 2024 2023 CASH FLOWS FROM OPERATING ACTIVITIES: Net (loss) income $ ( 4,069 ) $ 1,165 Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities: Impairment loss 1,389 - Depreciation and amortization 585 577 Stock-based compensation 428 84 (Gain) loss on investments ( 30 ) 126 Non-cash lease expense 693 657 Deferred taxes ( 1,196 ) ( 37 ) Changes in operating assets and liabilities: Accounts receivable 344 146 Prepaid income taxes and tax receivable ( 346 ) 172 Inventories 56 ( 78 ) Other assets ( 329 ) ( 204 ) Accounts payable and accrued expenses 1,260 ( 86 ) Operating lease liabilities ( 696 ) ( 671 ) Net cash (used in) provided by operating activities ( 1,911 ) 1,851 CASH FLOWS FROM INVESTING ACTIVITIES: Cash paid for acquisition of business, net ( 403 ) - Deposit related to investment ( 1,800 ) - Purchase of property and equipment ( 54 ) ( 95 ) Payment of purchase consideration payable ( 629 ) ( 623 ) Proceeds from sale of investments 13,610 9,281 Purchase of investments ( 11,650 ) ( 15,855 ) Net cash used in investing activities ( 926 ) ( 7,292 ) CASH FLOWS FROM FINANCING ACTIVITIES: Repayment of loan and finance lease liability ( 30 ) ( 20 ) Net cash used in financing activities ( 30 ) ( 20 ) Effect of exchange rate change on cash and cash equivalents ( 196 ) 118 NET DECREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH ( 3,063 ) ( 5,343 ) CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING BALANCE 8,586 13,929 CASH, CASH EQUIVALENTS AND RESTRICTED CASH, ENDING BALANCE $ 5,523 $ 8,586 Cash and cash equivalents $ 5,461 $ 8,161 Restricted cash 62 425 Total cash, cash equivalents and restricted cash shown in statement of cash flows $ 5,523 $ 8,586 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the period for: Interest $ 16 $ 15 Income taxes (net of refunds received) $ 155 $ 232 NON-CASH INVESTING AND FINANCING ACTIVITIES: Purchase consideration payable $ 511 $ - Acquisition of operating right-of-use assets through operating lease liability $ 847 $ 104 The accompanying notes are an integral part of these consolidated financial statements. F- 6 Table of Contents NOTE 1 . ORGANIZATION AND DESCRIPTION OF BUSINESS The Marygold Companies, Inc., (the “Company” or “The Marygold Companies”), a Nevada corporation, is a global holding company that intends to focus on financial services. The Company is currently directing its investments towards financial services and the emerging Fintech space. The operations of the Company’s wholly-owned subsidiaries are summarized as follows: ● Fund Management - USCF Investments, Inc., a Delaware corporation (“USCF Investments”), with corporate headquarters in Walnut Creek, California and its wholly-owned subsidiaries: ○ United States Commodity Funds, LLC, a Delaware limited liability company (“USCF LLC”), and ○ USCF Advisers, LLC, a Delaware limited liability company (“USCF Advisers”). The principal place of business for each of USCF LLC and USCF Advisers is in Walnut Creek, California. ● Food Products – Gourmet Foods, Ltd., a registered New Zealand company located in Tauranga, New Zealand and its wholly-owned subsidiary, Printstock Products Limited, a registered New Zealand company, with is principal manufacturing facility in Napier, New Zealand. ● Security Systems – Brigadier Security Systems (2000) Ltd., a Canadian registered corporation, with locations in Regina and Saskatoon, Saskatchewan, Canada. ● Beauty Products - Kahnalytics, Inc., a California corporation, doing business as “Original Sprout,” located in San Clemente, California. ● Financial Services – United States and Great Britain: ○ Marygold & Co., a Delaware corporation, based in Denver, Colorado, and its wholly-owned subsidiary, Marygold & Co. Advisory Services, LLC, a Delaware limited liability company, whose principal business office is in New Albany, Ohio; ○ Marygold & Co., (UK) Limited, a private limited company incorporated and registered in England and Wales, whose registered office is in London, England, and its wholly-owned subsidiaries: ■ Tiger Financial & Asset Management Limited, a company incorporated and registered in England and Wales, whose registered office is in Northampton, England; and ■ Step-By-Step Financial Planners Limited, a company incorporated and registered in England and Wales, whose registered office is in Staffordshire, England. The Company manages its operating businesses on a decentralized basis. There are no centralized or integrated operational functions such as marketing, sales, legal or other professional services and there is little involvement by The Marygold Companies’ management in the day-to-day business affairs of its operating subsidiary businesses apart from oversight. The Company’s corporate management is responsible for capital allocation decisions, investment activities and selection and retention of the Chief Executive to head each of the operating subsidiaries. The Company’s corporate management is also responsible for corporate governance practices, monitoring regulatory affairs, including those of its operating businesses and involvement in governance-related issues of its subsidiaries as needed. NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Accounting Principles The Company has prepared the accompanying financial statements on a consolidated basis. In the opinion of management, the accompanying consolidated balance sheets and related consolidated statements of operations, comprehensive loss, stockholders’ equity, and cash flows include all adjustments, consisting only of normal recurring items, necessary for their fair presentation, prepared on an accrual basis, in conformity with generally accepted accounting principles in the United States of America (“U.S. GAAP”). Principles of Consolidation The accompanying consolidated financial statements, which are referred herein as the “Financial Statements”, include the accounts of The Marygold Companies and its wholly-owned subsidiaries. Intercompany transactions and balances have been eliminated in consolidation. Use of Estimates The preparation of the Financial Statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Financial Statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Foreign Currencies We record foreign currency translation adjustments and transaction gains and losses in accordance with Accounting Standards Codification (“ASC”) 830, Foreign Currency Matters. Assets and liabilities are translated at the exchange rate on the balance sheet date, and operating results are translated at the average exchange rates throughout the prevailing period. Translation adjustments resulting from this process are recorded to other comprehensive income (loss). F- 7 Table of Contents Cash and Cash Equivalents Cash and cash equivalents includes all cash and highly liquid debt instruments with original maturities of three months or less on the date of purchase. The Company maintains its cash and cash equivalents in financial institutions in the United States, United Kingdom, Canada, and New Zealand. Accounts in the United States are insured by the Federal Deposit Insurance Corporation. Accounts in New Zealand are uninsured. The Company has, at times, held deposits in excess of insured amounts, but the Company does not expect any losses in such accounts. Accounts Receivable Management regularly reviews the composition of accounts receivable and analyzes customer credit worthiness, customer concentrations, current economic trends, changes in customer payment patterns and reasonable and supportable forecasts about the future to determine whether or not an account should be deemed uncollectible. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. As of June 30, 2024 and 2023, the Company had immaterial amounts reserved for credit losses. Accounts receivable due from related parties consist of fund asset management fees receivable from the USCF Investments business. Management fees receivable generally consist of one month of management fees which are collected in the month after they are earned. Concentration of Credit Risk Our subsidiary USCF relies on the revenues generated through the funds it manages. The concentration of fund management revenue and related receivables were (dollars in thousands). SCHEDULE OF CONCENTRATION RISK Year Ended June 30, June 30, 2024 2023 2024 2023 Revenue % of Total Revenue % of Total Accounts Receivable % of Total Accounts Receivable % of Total Fund USO $ 6,553 35 % $ 8,685 42 % $ 473 33 % $ 596 36 % UNG 5,662 30 % 4,573 22 % 370 25 % 554 33 % UMI 1,967 10 % 1,155 6 % 185 13 % 140 8 % All Others 4,783 25 % 6,449 31 % 427 29 % 384 23 % Total $ 18,965 100 % $ 20,862 100 % $ 1,455 100 % $ 1,674 100 % There are no significant concentrations for the other operating subsidiaries on a consolidated basis. Inventories Inventories which consist of (i) food products, printing supplies, and packaging in New Zealand; (ii) hair and skin care finished products and components in the US; (iii) security system hardware in Canada and (iv) printed debit cards and wearables in the US and all are valued at the lower of cost or net realizable value. Inventories in Canada and New Zealand are maintained on the first-in, first-out method, while inventory in the U.S is maintained using the average cost method. Inventories include product cost, inbound freight and warehousing costs where applicable. An assessment is made at the end of each fiscal quarter to determine what slow-moving inventory items, if any, should be deemed obsolete and written down to their estimated net realizable value. For the years ended June 30, 2024 and 2023 , the expense for slow moving or obsolete inventory was de minimis. F- 8 Table of Contents Property and Equipment Property and equipment are stated at cost, net of accumulated depreciation. Expenditures for maintenance and repairs are charged to earnings as incurred; additions, renewals and leasehold improvements are capitalized. Office furniture and equipment include office fixtures, computers, printers and other office equipment plus software and applicable packaging designs. Leasehold improvements are depreciated over the shorter of the useful life of the improvement and the length of the lease. When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts, and any gain or loss is included in operations. Depreciation is computed using the straight-line method over the estimated useful life of the asset. SCHEDULE OF PROPERTY AND EQUIPMENT ESTIMATED USEFUL LIFE Category Estimated Useful Life (in years) Building 39 Manufacturing equipment 5 to 10 Other equipment 3 to 5 Leases The Company’s most significant operating leases are real estate leases of office, warehouse and production facilities. Operating leases are included in operating lease right-of-use assets and operating lease liabilities in the Consolidated Balance Sheets. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease right-of-use assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. In determining the present value of lease payments, the Company uses its incremental borrowing rate based on the information available at the lease commencement date. The operating lease right-of-use assets also include any lease payments made at or before the commencement date and are reduced by any lease incentives received. The Company’s lease terms may include options to extend or not terminate the lease when it is reasonably certain that it will exercise any such options. For the majority of its leases, the Company concluded that it is not reasonably certain that any renewal options would be exercised, and, therefore, the amounts are not recognized as part of operating lease right-of-use assets nor operating lease liabilities. Leases with an initial term of 12 months or less are not recorded on the balance sheet and expensed as incurred and included within rent expense under general and administrative expense. Lease expense is recognized on a straight-line basis over the expected lease term. The Company has one finance lease wherein ownership of the underlying asset will be transferred to the Company at the end of the lease term. The underlying asset of the finance lease is a solar energy system at Gourmet Foods that is included with Property and equipment on the Consolidated Balance Sheets. Intangible Assets Intangible assets consist of brand names, recipes, customer relationships and the internally developed software for the Fintech app developed by Marygold. Intangible assets with finite lives are amortized over the estimated useful life and are evaluated for impairment at least on an annual basis and whenever events or changes in circumstances indicate that the carrying value may not be recoverable. When it is determined that an intangible asset is impaired, the Company recognizes an impairment loss based on the excess of the carrying amount over the fair value of the assets. The Company recorded an impairment loss of $ 1.0 million during fiscal 2024 relating to intangible assets in its beauty products segment and there was no impairment recorded during fiscal 2023 . Goodwill Goodwill represents the excess of the aggregate purchase price over the fair value of the net assets acquired in a business combination transaction. Goodwill is tested for impairment on an annual basis during the fourth quarter of the Company’s fiscal year, or more frequently if events or changes in circumstances indicate that the carrying amount of goodwill may be impaired. The Company first performs a qualitative test to determine if goodwill is impaired at a reporting unit. In performing this test, the Company evaluates macroeconomic factors, industry and market considerations, cost factors such as the increase in the cost of materials or labor or other costs, overall financial performance, changes in key personnel or customers or strategy, and other entity-specific events or trends that could indicate impairment, among other items. If the results of this test indicate that it is more likely than not that the fair value of the reporting unit is below its carrying value, a quantitative test is then performed to determine the amount of the impairment. When impaired, the carrying value of goodwill is written down to fair value. The Company recorded a goodwill impairment loss of $ 0.4 million during fiscal 2024 relating to its beauty products segment and there was no impairment recorded during fiscal 2023 . F- 9 Table of Contents Impairment of Long-Lived Assets The Company tests long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable through the estimated undiscounted cash flows expected to result from the use and eventual disposition of the assets. Whenever any such impairment exists, an impairment loss will be recognized for the amount by which the carrying value exceeds the fair value. Other than as described in the intangible assets section, there was no impairment recorded for the years ended June 30, 2024 and 2023. Investments and Fair Value of Financial Instruments Equity securities included in short-term investments have readily determinable fair values and are carried at fair value. Debt securities included in short-term investments are acquired with the intent to sell in the near term and are carried at fair value. Any changes in the fair value of trading debt securities and equity securities are reflected as a component of other income (expense) in the consolidated statement of operations. The Company measures the investments at fair value at period end with any changes in fair value reflected as unrealized gains or (losses) which is included as part of other (expense) income in the Consolidated Statements of Operations. The Company values its investments in accordance with ASC 820 – Fair Value Measurements and Disclosures (“ASC 820”). ASC 820 defines fair value, establishes a framework for measuring fair value in U.S. GAAP, and expands disclosures about fair value measurement. ASC 820 establishes a fair value hierarchy that distinguishes between: (1) market participant assumptions developed based on market data obtained from sources independent of the Company (observable inputs) and (2) the Company’s own assumptions about market participant assumptions developed based on the best information available under the circumstances (unobservable inputs). The three levels defined by the ASC 820 hierarchy are as follows: Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 assets include the following: quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability, and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market-corroborated inputs). Level 3 – Unobservable pricing input at the measurement date for the asset or liability. Unobservable inputs shall be used to measure fair value to the extent that observable inputs are not available. In some instances, the inputs used to measure fair value might fall within different levels of the fair value hierarchy. The level in the fair value hierarchy within which the fair value measurement in its entirety falls shall be determined based on the lowest input level that is significant to the fair value measurement in its entirety. F- 10 Table of Contents Revenue Recognition Revenue consists of fees earned through management of investment funds in the United States and in the United Kingdom primarily based on assets under management (“AUM”), sales of gourmet meat pies and printing of food wrappers in New Zealand, sales of security alarm system installation and maintenance services in Canada, and sales of hair and skin care products in the United States and internationally. Revenue is accounted for net of sales taxes, sales returns, and trade discounts. The performance obligation is satisfied when the product has been shipped and title, risk of loss and rewards of ownership have been transferred. For most of the Company’s product sales or services, the revenue recognition criteria described below are met at the time the product is shipped, the subscription period commences, or the management services are provided. For our Brigadier subsidiary in Canada, the Company operates under contract with an alarm monitoring company that pays a percentage of its recurring monitoring fee to Brigadier in exchange for continued customer service and support functions with respect to each customer maintained under contract by the monitoring company. The Company has no costs of contracts which require capitalization. The Company’s only contract assets are accounts receivable. The Company has no contract liabilities other than deposits received periodically which are insignificant to the consolidated financial statements. The Company generates revenue, in part, through contractual monthly recurring fees received for providing ongoing customer support services to monitoring company clientele. The five-step process governing contract revenue reporting includes: 1. Identifying the contract(s) with customers 2. Identifying the performance obligations in the contract 3. Determining the transaction price 4. Allocating the transaction price to the performance obligations in the contract 5. Recognizing revenue when or as the performance obligation is satisfied For Brigadier, t ransactions involve security systems that are sold outright to the customer where the Company’s performance obligations include customer support services and the sale and installation of the security systems. For such arrangements, the Company allocates a portion of the transaction price to each performance obligation based on a relative stand-alone selling price. Revenue associated with the sale and installation of security systems is recognized once installation is complete and is reflected as security system revenue in the Consolidated Statements of Operations. Revenue associated with customer support services is recognized as those services are provided, and is included as a component of security system revenue in the Consolidated Statements of Operations. None of the other subsidiaries of the Company generates revenue from long-term contracts. F- 11 Table of Contents Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. A valuation allowance is provided for deferred tax assets if it is more likely than not that these items will either expire before the Company is able to realize their benefits or if future deductibility is uncertain. When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination. Applicable interest and penalties associated with unrecognized tax benefits are classified as additional income taxes in the statements of operations. Advertising Costs The Company expenses the cost of advertising as incurred. Marketing and advertising costs for the years ended June 30 , 2024 and 2023 were $ 3.2 million and $ 2.6 million, respectively. Segment Reporting The Company defines operating segments as components about which separate financial information is available that is evaluated regularly by the chief operating decision maker, which is our Chief Executive Officer, in deciding how to allocate resources and in assessing performances. Business Combinations We allocate the fair value of purchase consideration to the tangible assets acquired, liabilities assumed and intangible assets acquired based on their estimated fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. Such valuations require management to make significant estimates and assumptions, especially with respect to intangible assets. Significant estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows from acquired customers, acquired trade names from a market participant perspective, useful lives and discount rates. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. During the measurement period, which is one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed. F- 12 Table of Contents Recent Accounting Pronouncements In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-07, Improvements to Reportable Segment Disclosures (Topic 280). The guidance expands the disclosures required for reportable segments in our annual and interim consolidated financial statements, primarily through enhanced disclosures about significant segment expenses. The standard will be effective for us beginning with our annual reporting for fiscal year 2025 and interim periods thereafter, with early adoption permitted. We are currently evaluating the impact of this standard on our segment disclosures. In December 2023, the FASB issued ASU No. 2023-09, Improvements to Income Tax Disclosures (Topic 740). The guidance requires disclosure of disaggregated income taxes paid, prescribes standardized categories for the components of the effective tax rate reconciliation, and modifies other income tax-related disclosures. The standard will be effective for us beginning with our annual reporting for fiscal year 2026, with early adoption permitted. We are currently evaluating the impact of this standard on our income tax disclosures. The Company adopted the accounting standard ASU 2016-13, Financial Instruments – Credit Losses on Financial Instruments at the beginning of its fiscal 2024. The guidance replaced the existing incurred loss impairment model with an expected credit loss model and requires a financial asset measured at amortized cost to be presented at the net amount expected to be collected. The adoption of the new standard did not have a material impact on the recognition of losses on its receivables. NOTE 3. NET INCOME (LOSS) PER SHARE Basic net (loss) income per share is based upon the weighted average number of common shares outstanding. This calculation includes the weighted average number of Series B Convertible Preferred shares outstanding also as they are deemed to be substantially similar to the common shares and shareholders are entitled to the same liquidation and dividend rights. Diluted net (loss) income per share is based on the assumption that all dilutive convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. For the years ended June 30, 2024 and 2023, the Company excluded 135,567 and 281,696 common stock equivalents, respectively, from the diluted net (loss) income per share calculation as their effect would be anti-dilutive. Since the Company generated a net loss in fiscal 2024, basic and diluted net (loss) income per share were the same. The components of basic and diluted net (loss) income per share were as follows (in thousands, except per share data): SCHEDULE OF EARNINGS PER SHARE, BASIC AND DILUTED Year Ended June 30, 2024 Year Ended June 30, 2023 Net (Loss) Income Shares Per Share Net Income Shares Per Share Basic net (loss) income per share: Net (loss) income available to common shareholders $ ( 3,970 ) 39,409 $ ( 0.10 ) $ 1,137 39,384 $ 0.03 Net (loss) income available to preferred shareholders ( 99 ) 987 $ ( 0.10 ) 28 987 $ 0.03 Basic net (loss) income per share $ ( 4,069 ) 40,396 $ ( 0.10 ) $ 1,165 40,371 $ 0.03 Diluted net (loss) income per share: Net (loss) income available to common shareholders, basic $ ( 3,970 ) 39,409 $ 1,136 39,384 Impact of dilutive securities - - 1 33 Net (loss) income available to common shareholders, diluted ( 3,970 ) 39,409 $ ( 0.10 ) 1,137 39,417 $ 0.03 Net (loss) income available to preferred shareholders ( 99 ) 987 $ ( 0.10 ) 28 987 $ 0.03 Diluted net (loss) income per share $ ( 4,069 ) 40,396 $ ( 0.10 ) $ 1,165 40,404 $ 0.03 F- 13 Table of Contents NOTE 4. CERTAIN BALANCE SHEET DETAILS The components of certain balance sheet line items are as follows (in thousands). SCHEDULE OF COMPONENTS OF CERTAIN BALANCE SHEET June 30, June 30, Restricted cash 2024 2023 Deposit for deferred purchase price payment for Tiger $ - $ 413 Deposit restricted relating to account for Fintech app 50 - Deposit for securing a lease bond 12 12 Total restricted cash $ 62 $ 425 June 30, June 30, Other current assets 2024 2023 Deposit for potential 9.9% equity interest in financial institution $ 1,800 $ - Prepaid expenses and other current assets 1,234 904 Total other current assets $ 3,034 $ 904 Included in the other current assets balance as of June 30, 2024 was a deposit of $ 1.8 million made in connection with the potential acquisition of a 9.9 % equity interest in a domestic financial institution that is currently seeking certain regulatory approval. If the regulatory approval is obtained, the deposit will convert to an equity interest in the financial institution and if the regulatory approval is not obtained the deposit will be refunded to the Company. SCHEDULE OF INVENTORY June 30, June 30, Inventories 2024 2023 Raw materials and supplies $ 1,417 $ 1,456 Finished goods 774 798 Total inventories $ 2,191 $ 2,254 SCHEDULE OF PROPERTY, PLANT AND EQUIPMENT June 30, June 30, Property and equipment, net 2024 2023 Manufacturing equipment $ 1,935 $ 1,915 Land and building 575 575 Other equipment 827 784 Total property and equipment, gross 3,337 3,274 Accumulated depreciation ( 2,171 ) ( 2,019 ) Total property and equipment, net $ 1,166 $ 1,255 F- 14 Table of Contents For the years ended June 30, 2024 and 2023, depreciation expense for property and equipment totaled $ 0.1 million and $ 0.2 million, respectively. SCHEDULE OF OTHER ASSETS NON-CURRENT June 30, June 30, Other assets, non-current 2024 2023 Equity investment in a registered investment advisor $ 502 $ 502 Deposits and other assets 117 52 Total other assets, non-current $ 619 $ 554 The $ 0.5 million investment represents a 10% equity interest in a registered investment advisor accounted for on a cost basis which we believe approximates fair value. SCHEDULE OF ACCOUNTS PAYABLE AND ACCRUED LIABILITIES June 30, June 30, Accounts payable and accrued expenses 2024 2023 Accounts payable $ 1,955 $ 1,326 Accrued operating expenses 1,185 893 Accrued payroll, vacation and bonus payable 736 455 Taxes payable 145 97 Total $ 4,021 $ 2,771 NOTE 5. INVESTMENTS USCF Investments, from time to time, provides initial seed capital in connection with the creation of ETPs or ETFs that are managed by USCF or USCF Advisers. USCF Investments classifies these investments as current assets as these investments are generally sold within one year of the balance sheet date. Investments in which no controlling financial interest or significant influence exists are recorded at fair value with the change included in earnings on the Consolidated Statements of Operations. As of June 30, 2024 and 2023, the Company invested a total of $ 7.5 million and $ 5.8 million, respectively, of funds managed by USCF Advisers which are related parties and are included in other equities in the below table. The Company elected the fair value option related to this investment as the shares were purchased and will be sold on the market and this accounting treatment is deemed to be most informative. In addition to the holdings in these funds, the Company also invests in marketable securities. The Company recognized unrealized gains (losses) of $ 0.1 million and ($ 0.1 million) for the years ended June 30, 2024 and 2023, respectively. All of the Company’s short-term investments are classified as Level 1 assets as of June 30, 2024 and 2023. Investments measured at estimated fair value consist of the following as of June 30, 2024 and 2023 (in thousands): SCHEDULE OF AVAILABLE-FOR-SALE SECURITIES RECONCILIATION June 30, 2024 Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Money market funds $ 1,788 $ - $ - $ 1,788 Other short-term investments 295 1 - 296 Other equities - related parties 7,394 73 7,467 Total short-term investments $ 9,477 $ 74 $ - $ 9,551 F- 15 Table of Contents June 30, 2023 Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Money market funds $ 3,402 $ - $ - $ 3,402 Other short-term investments 280 - ( 2 ) 278 Short-term treasury bills 1,952 17 - 1,969 Other equities - related parties 5,972 88 ( 229 ) 5,831 Total short-term investments $ 11,607 $ 105 $ ( 231 ) $ 11,481 During the years ended June 30, 2024 and 2023, there were no transfers between Level 1 and Level 2. NOTE 6. BUSINESS COMBINATIONS Step-By-Step On January 31, 2024, Marygold UK entered into a Share Purchase Agreement (“SPA”) to acquire all the issued and outstanding shares of Step-By-Step Financial Planners Limited (“Step-By-Step”), subject to certain closing conditions and regulatory approval. The transaction closed on April 30, 2024 with an agreed purchase price of $ 1.2 million, subject to adjustment as provided for in the SPA. Marygold UK paid $ 0.7 million upon the closing and the remaining $ 0.5 million owed will be payable in two subsequent payments as provided in the SPA. Step-By-Step is an asset manager and investment advisor based in Staffordshire, England with approximately $ 37 million in assets under management as of June 30, 2024. Step-By-Step will be operated as a subsidiary of Marygold UK. In addition to growing the business through increasing assets under management, Marygold UK intends to project the fintech mobile app services offered in the U.S. into the U.K. through the established contacts and certifications held by Step-By-Step. The assets and liabilities to which the Company has preliminarily allocated the purchase price was as follows (in thousands): SCHEDULE OF ASSETS AND LIABILITIES OF COMPANY HAS PRELIMINARILY ALLOCATED THE PURCHASE PRICE Cash $ 254 Accounts receivable and other assets 40 Acquired intangible assets – brand name 88 Acquired intangible assets – customer relations 375 Acquired intangible assets 375 Goodwill 591 Accounts payable and accrued expenses ( 64 ) Deferred tax liability ( 116 ) Total purchase price $ 1,168 From the date of acquisition through June 30, 2024, Step-By-Step revenue of $ 57,000 and operating loss of a de minimis amount was included in the Company’s consolidated statement of operations. The following are the supplemental consolidated financial results of the Company on unaudited pro forma basis as if the acquisition of Step-By-Step had occurred on July 1, 2022 , giving effect on a pro forma basis to purchase accounting adjustments such as amortization of intangible assets and acquisition related costs. The pro forma data is for informational purposes only and may not necessarily reflect the actual results of operations had Step-By-Step been operated as part of the Company since July 1, 2022 . Furthermore, the pro forma results do not intend to predict the future results of operations of the Company. SCHEDULE OF PRO FORMA INFORMATION (in thousands) 2024 2023 Year Ended June 30, (in thousands) 2024 2023 Revenue $ 33,186 $ 35,234 Operating (loss) ( 6,161 ) ( 1,508 ) Tiger Marygold UK acquired Tiger Financial and Asset Management Limited (“Tiger”), an asset manager and investment advisor, in 2022 with an agreed purchase price of $ 2.9 million, subject to adjustment as provided for in the Stock Purchase Agreement (“SPA”). In accordance with the SPA, there was a downward adjustment of the purchase price of less than $ 0.1 million as a result of existing clientele closing their accounts prior to December 31, 2023. The remaining purchase price payment of $ 0.6 million was made in January 2024. F- 16 Table of Contents NOTE 7. IMPAIRMENT LOSS During the fourth quarter of fiscal 2024, the Company recorded an impairment loss of $ 1.4 million related to the goodwill and other intangible assets in its beauty products business unit. The business unit has been suffering from increased losses resulting from pandemic-related changes in its distribution channels and increased costs. The impairment loss of $ 1.4 million included goodwill of $ 0.4 million and indefinite and finite lived intangible assets totaling $ 1.0 million relating to brand name, formulas and customer relations. The Company determined the fair value of the reporting unit using multiple methods including discounted cash flows and pricing of comparable companies. NOTE 8. GOODWILL Changes in the carrying amount of goodwill were as follows (in thousands): SCHEDULE OF GOODWILL Goodwill June 30, 2022 June 30, 2023 Acquisitions Impairments June 30, 2024 Beauty products - Original Sprout $ 417 $ 417 $ - $ ( 417 ) $ - Food products - Gourmet Foods 275 275 - - 275 Security systems - Brigadier 351 351 - - 351 Financial services - Marygold & Co. (UK) (1) 1,264 1,264 591 - 1,855 Total $ 2,307 $ 2,307 $ 591 $ ( 417 ) $ 2,481 (1) Refer to Note 6, Business Combinations, regarding increase in goodwill during the years ended June 30, 2024. The Company tests for goodwill impairment at each reporting unit annually on June 30. Refer to Note 7, Impairment Loss, regarding the goodwill impairment recorded during 2024. NOTE 9. INTANGIBLE ASSETS SCHEDULE OF INTANGIBLE ASSETS Intangible Assets (Gross) Accumulated Amortization Intangible Asset (Net) June 30, 2024 Intangible Assets Weighted Average Remaining Life (in years) Intangible Assets (Gross) Accumulated Amortization Intangible Asset (Net) (dollars in thousands) Customer relationships 5.4 $ 1,540 $ ( 624 ) $ 916 Brand name 1.7 414 ( 332 ) 82 Brand name – indefinite lived N/A 231 - 231 Internally developed software 2.0 218 ( 72 ) 146 Total $ 2,403 $ ( 1,028 ) $ 1,375 Intangible Assets (Gross) Accumulated Amortization Intangible Asset (Net) June 30, 2023 Intangible Assets Weighted Average Remaining Life (in years) Intangible Assets (Gross) Accumulated Amortization Intangible Asset (Net) (dollars in thousands) Customer relationships 5.1 $ 1,364 $ ( 630 ) $ 734 Brand name 2.8 402 ( 290 ) 112 Brand name – indefinite lived N/A 896 - 896 Recipes 2.5 1,222 ( 852 ) 370 Internally developed software 3.0 218 - 218 Total $ 4,102 $ ( 1,772 ) $ 2,330 Total amortization expense for intangible assets was $ 0.4 million for both the years ended June 30, 2024 and 2023. Refer to Note 7, Impairment Loss, regarding the intangible asset impairment recorded during fiscal 2024. Estimated remaining amortization expenses of intangible assets for the next five fiscal years and thereafter are as follows (in thousands): SCHEDULE OF FINITE-LIVED INTANGIBLE ASSETS, FUTURE AMORTIZATION EXPENSE Years Ending June 30, Expense 2025 $ 321 2026 290 2027 146 2028 146 2029 146 Thereafter 326 Total $ 1,375 F- 17 Table of Contents NOTE 10. RELATED PARTY TRANSACTIONS USCF Investments - Related Party Transactions The Funds managed by USCF and USCF Advisers are considered to be related parties. The Company’s fund management revenue, totaling $ 19.0 million and $ 20.9 million for the years ended June 30, 2024 and 2023, respectively, were earned from these related parties. Accounts receivable, totaling $ 1.5 million and $ 1.7 million as of June 30, 2024 and 2023, respectively, were owed from the Funds that are related parties. USCF Investments, from time to time, provides initial investments in the creation of ETP and ETF funds that USCF manages. As of June 30, 2024 and 2023, the Company invested a total of $ 7.5 million and $ 5.8 million, respectively, of funds managed by USCF Advisers. The Company owns approximately 45 % and 68 % of the outstanding shares of these investments as of June 30, 2024 and 2023, respectively. USCF Advisors is contractually obligated to pay license fees up to $ 0.8 million to an affiliated entity related to intellectual property rights for two of the funds during fiscal 2025 and 2026. The amount of license fee accrued as an expense during fiscal 2024 was $ 0.4 million. NOTE 11. LOANS As of June 30, 2024, Brigadier had an outstanding principal balance of $ 0.3 million due to Bank of Montreal related to the purchase of its Saskatoon office land and building. The bank loan matured and was paid off in full in July 2024. Gourmet Foods has a finance lease liability related to a solar energy system. Total lease liabilities under the lease for the years ended June 30, 2024 and 2023 were $ 0.1 million and are included under loans-property and equipment on our Consolidated Balance Sheets. NOTE 12. STOCKHOLDERS’ EQUITY Warrants to Purchase Common Stock In connection with the Company’s underwritten public offering in fiscal 2022, the Company issued the underwriter’s warrants to purchase up to an aggregate of 82,500 shares of Common Stock as compensation for their services related to this issuance. The warrants may be exercised until March 14, 2027. The exercise price of each warrant is $ 2.40 per share. F- 18 Table of Contents Convertible Preferred Stock The Company has 50,000,000 shares authorized to issue as Preferred Stock. The Preferred Stock is designated into two series: 5,000,000 shares designated as Series A and 45,000,000 shares designated as Series B. As of June 30, 2024 there are no issued or outstanding shares of Series A stock. Each issued Series B Convertible Preferred Stock is convertible into 20 shares of common stock and carries a vote of 20 shares of common stock in all matters brought before the shareholders for a vote. There are 49,360 shares of Series B Convertible Preferred Stock outstanding as of June 30, 2024 and 2023. Stock-based Compensation In 2021, the Company adopted the 2021 Omnibus Equity Incentive Plan (“Equity Plan”) which provides for the grant of stock-based awards, including stock options, restricted stock awards (“RSAs”) and restricted stock units (“RSUs”), to employees and non-employees. A total of 5,000,000 shares of common stock are authorized for issuance under the Plan, of which 3,755,529 are available for future grants as of June 30, 2024. The fair value of stock options are estimated on the date of grant using the Black-Scholes option pricing model and recognized as compensation on a straight-line basis between the date of grant and the date the options become fully vested. Stock options issued have a term of ten years. The fair value of the options granted were estimated using the following assumptions: SCHEDULE OF SHARE BASED COMPENSATION Year Ended June 30, 2024 2023 Expected volatility 165 % 192 % Expected term 6.1 years 6.6 years Risk-free interest rate 4.2 % 3.6 % Expected dividend yield 0 % 0 % The fair value of RSAs is estimated on the grant date based on the closing quoted market price of the Company’s stock and generally vest over a four-year period following issuance date, subject to continued service. The fair value of RSAs is recognized as compensation on a straight-line basis between the date of grant and the date the RSAs become fully vested. During fiscal 2024 and 2023, the following activity occurred under the Company’s Equity Plan. SCHEDULE OF SHARE BASED COMPENSATION STOCK OPTIONS Stock Options Restricted Stock Number of Shares Weighted Average Exercise Price Number of Shares Weighted Average Grant Date Fair Value Outstanding at July 1, 2022 - $ - - $ - Granted 270,000 $ 1.61 288,733 $ 1.36 Balance at June 30, 2023 270,000 $ 1.61 288,733 $ 1.36 Granted 315,881 $ 1.15 447,543 $ 1.03 Released - $ - ( 31,376 ) $ 1.39 Expired ( 6,250 ) $ 1.64 - $ - Forfeited ( 38,750 ) $ 1.64 ( 23,585 ) $ 1.06 Outstanding at June 30, 2024 540,881 $ 1.34 681,315 $ 1.15 Exercisable at June 30, 2024 80,720 $ 1.60 The total fair value of the stock option grants, calculated using the Black-Scholes option-pricing model using the assumptions noted above, was determined to be $ 0.3 million and $ 0.4 million for fiscal 2024 and 2023, respectively. The weighted average remaining contractual term of the stock options outstanding as of June 30, 2024 was 8.9 years. The aggregate intrinsic value of stock options outstanding as of June 30, 2024 was $ 0.1 million. Stock-based compensation relating to RSAs totaled $ 0.3 million and less than $ 0.1 million for the years ended June 30, 2024 and 2023, respectively, and are included in salaries and compensation in the Consolidated Statements of Operations. Holders of RSAs generally have the rights and privileges of a stockholder with respect to the shares of common stock granted to the holder, including the right to vote such shares and the right to receive dividends with respect to such shares. However, all cash and stock dividends and distributions shall be held back by the Company for the holder’s account until such time as the related portion of the restricted stock award vests (at which time such dividends or distributions, as applicable, shall be released and paid). F- 19 Table of Contents Stock-based compensation relating to stock options and RSAs totaled $ 0.4 million and $ 0.1 million for the years ending June 30, 2024 and 2023, respectively, and are included in the Consolidated Statements of Operations. As of June 30, 2024, there was $ 0.5 million of unrecognized compensation expense related to outstanding stock options that will be recognized over a remaining weighted average period of 2.9 years and there was $ 0.5 million of unrecognized compensation expense related to outstanding RSAs that will be recognized over a remaining weighted average period of 2.0 years. The aggregate expected stock-based compensation expense remaining to be recognized reflects only awards as of June 30, 2024 and assumes no forfeiture activity. There were no shares issued for vendor services during the years ending June 30, 2024 and 2023 . NOTE 13. INCOME TAXES The following table summarizes (loss) income before income taxes (in thousands): SUMMARY OF (LOSS) INCOME BEFORE INCOME TAXES 2024 2023 Years Ended June 30, 2024 2023 United States $ ( 5,420 ) $ 1,321 Foreign ( 28 ) 273 (Loss) income before income taxes $ ( 5,448 ) $ 1,594 Income Tax Provision The composition of the benefit from (provision for) income taxes consisted of the following (in thousands): SCHEDULE OF BENEFIT FROM (PROVISION FOR) INCOME TAXES 2024 2023 Years Ended June 30, 2024 2023 United States $ 1,408 $ ( 356 ) Foreign ( 29 ) ( 73 ) Total benefit from (provision for) income taxes $ 1,379 $ ( 429 ) F- 20 Table of Contents 2024 2023 Years Ended June 30, 2024 2023 Current: Federal $ 299 $ ( 300 ) States ( 43 ) ( 78 ) Foreign ( 74 ) ( 87 ) Total current 182 ( 465 ) Deferred: Federal 1,071 22 States 81 - Foreign 45 14 Total deferred 1,197 36 Total benefit from (provision for) income taxes $ 1,379 $ ( 429 ) Tax effects of temporary differences that give rise to significant portions of the Company’s deferred tax assets for the years ended June 30, 2024 and 2023 are presented below (in thousands): SCHEDULE OF DEFERRED TAX ASSETS 2024 2023 Years Ended June 30, 2024 2023 Deferred tax assets: Intangible assets - U.S. $ 756 $ 462 Net operating loss 801 1 Capital loss carryover 43 1 Accruals, reserves and other - U.S. 369 307 Total deferred tax assets - U.S. $ 1,969 $ 771 Deferred tax liabilities: Intangible assets - foreign $ ( 313 ) $ ( 211 ) Accruals, reserves and other - foreign ( 47 ) ( 31 ) Total deferred tax liabilities - foreign $ ( 360 ) $ ( 242 ) Total net deferred tax assets $ 1,609 $ 529 F- 21 Table of Contents The Company’s accounting for deferred taxes involves the evaluation of several factors concerning the realizability of the Company’s net deferred tax assets. The Company primarily considered such factors as the Company’s history of operating losses, the nature of the Company’s deferred tax assets and the timing, likelihood and amount, if any, of future taxable income during the periods in which those temporary differences and carryforwards become deductible. The Company does not have a valuation allowance as of June 30, 2024 and 2023 as the Company believes that it is more likely than not that the net deferred tax assets will be realized . The benefit from (provision for) income taxes for the years ended June 30, 2024 and 2023 differed from the amounts computed by applying the statutory federal income tax rate of 21.0 % to pretax (loss) income as a result of the following (in thousands): SCHEDULE OF INCOME TAX BENEFIT EXPENSE 2024 2023 Years Ended June 30, 2024 2023 Federal tax benefit (expense) at statutory rate $ 1,144 $ ( 335 ) State income taxes 47 ( 63 ) Permanent differences 240 ( 73 ) Foreign tax credit - 57 Foreign rate differential ( 52 ) ( 15 ) Total tax benefit (expense) $ 1,379 $ ( 429 ) 2024 2023 Years Ended June 30, 2024 2023 Federal tax benefit (expense) at statutory rate 21.0 % ( 21.0 ) % State income taxes 0.9 % ( 3.9 )% Permanent differences 4.1 % ( 4.6 )% Foreign rate differential ( 0.7 )% ( 1.0 )% Foreign tax credit 0 % 3.6 % Total tax benefit (expense) 25.3 % ( 26.9 ) % F- 22 Table of Contents Tax positions are evaluated in a two-step process. The Company first determines whether it is more likely than not that a tax position will be sustained upon examination. If a tax position meets the more-likely-than-not recognition threshold it is then measured to determine the amount of benefit to recognize in the financial statements. The tax position is measured as the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. The change in the balance of gross unrecognized tax benefits, which includes interest and penalties, during the year ended June 30, 2024 was as follows (in thousands): SCHEDULE OF UNRECOGNIZED TAX BENEFITS Balance at June 30, 2023 $ 328 Reductions based on tax positions taken during a prior period ( 328 ) Balance at June 30, 2024 $ - The Company files income tax returns in the United States, and various state and foreign jurisdictions. The federal, state and foreign income tax returns are subject to tax examinations for the tax years 2019 through 2023 as of year ended June 30, 2024 . To the extent the Company has tax attribute carry forwards, the tax years in which the attribute was generated may still be adjusted upon examination by the U.S. Internal Revenue Service, state or foreign tax authorities to the extent utilized in a future period. There were no ongoing examinations by taxing authorities as of June 30, 2024 . The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. As of June 30, 2023, the Company accrued and recognized as a liability $ 0.1 million of interest and related penalties to uncertain tax positions. NOTE 14. COMMITMENTS AND CONTINGENCIES Lease Commitments F- 23 Table of Contents The Company leases various facilities and offices in the US, UK, Canada and New Zealand with varying lease terms. For the years ended June 30, 2024 and 2023, the combined operating lease costs of the Company totaled $ 0.9 million and $ 0.8 million, respectively, and are recorded in general and administrative expense in the Consolidated Statements of Operations. Future minimum consolidated lease payments for the Company are as follows (in thousands): SCHEDULE OF FUTURE MINIMUM CONSOLIDATED LEASE PAYMENTS Year Ended June 30, Lease Amount Finance Lease 2025 $ 648 $ 19 2026 332 19 2027 72 19 2028 - 19 2029 - 19 Thereafter - 47 Total minimum lease payments 1,052 142 Less: present value discount ( 65 ) ( 41 ) Total lease liabilities $ 987 $ 101 The weighted average remaining lease term for the Company’s operating leases was 1.3 years as of June 30, 2024 and a weighted-average discount rate of 5.3 % was used to determine the total operating lease liabilities. The remaining lease term for the Company’s finance lease was 7.4 years as of June 30, 2024 with an annual interest rate of 7.0 %. Other Agreements and Commitments As Marygold builds out its Fintech app, it enters into agreements with various service providers. As of June 30, 2024, Marygold has future payment commitments with its primary service vendors totaling $ 1.1 million including $ 1.0 million due in fiscal 2025 and $ 0.1 million due in fiscal 2026. F- 24 Table of Contents Litigation From time to time, the Company may be involved in legal proceedings arising primarily from the ordinary course of their respective businesses. Except as described below, there are no pending legal proceedings against the Company. The Company’s policy is to expense legal costs relating to litigation as the costs are incurred. USCF is an indirect wholly-owned subsidiary of the Company. USCF LLC, as the general partner of the United States Oil Fund, LP (“USO”) and the general partner and sponsor of the related public funds may, from time to time, be involved in litigation arising out of its operations in the ordinary course of business. Except as described herein, USO and USCF are not currently party to any material legal proceedings. In re: United States Oil Fund, LP Securities Litigation On June 19, 2020, USCF LLC, USO, John P. Love, and Stuart P. Crumbaugh were named as defendants in a putative class action filed by purported shareholder Robert Lucas (the “Lucas Class Action”). The Court thereafter consolidated the Lucas Class Action with two related putative class actions filed on July 31, 2020 and August 13, 2020, and appointed a lead plaintiff. The consolidated class action is pending in the U.S. District Court for the Southern District of New York under the caption In re: United States Oil Fund, LP Securities Litigation, Civil Action No. 1:20-cv-04740. On November 30, 2020, the lead plaintiff filed an amended complaint (the “Amended Lucas Class Complaint”). The Amended Lucas Class Complaint asserts claims under the 1933 Act, the Exchange Act, and Rule 10b-5 . The Amended Lucas Class Complaint challenges statements in registration statements that became effective on February 25, 2020 and March 23, 2020 as well as subsequent public statements through April 2020 concerning certain extraordinary market conditions and the attendant risks that caused the demand for oil to fall precipitously, including the COVID-19 global pandemic and the Saudi Arabia-Russia oil price war. The Amended Lucas Class Complaint purports to have been brought by an investor in USO on behalf of a class of similarly-situated shareholders who purchased USO securities between February 25, 2020 and April 28, 2020 and pursuant to the challenged registration statements. The Amended Lucas Class Complaint seeks to certify a class and to award the class compensatory damages at an amount to be determined at trial as well as costs and attorney’s fees. The Amended Lucas Class Complaint named as defendants USCF, USO, John P. Love, Stuart P. Crumbaugh, Nicholas D. Gerber, Andrew F Ngim, Robert L. Nguyen, Peter M. Robinson, Gordon L. Ellis, and Malcolm R. Fobes III, as well as the marketing agent, ALPS Distributors, Inc., and the Authorized Participants: ABN Amro, BNP Paribas Securities Corporation, Citadel Securities LLC, Citigroup Global Markets, Inc., Credit Suisse Securities USA LLC, Deutsche Bank Securities Inc., Goldman Sachs & Company, J.P. Morgan Securities Inc., Merrill Lynch Professional Clearing Corporation, Morgan Stanley & Company Inc., Nomura Securities International Inc., RBC Capital Markets LLC, SG Americas Securities LLC, UBS Securities LLC, and Virtu Financial BD LLC. F- 25 Table of Contents The lead plaintiff has filed a notice of voluntary dismissal of its claims against BNP Paribas Securities Corporation, Citadel Securities LLC, Citigroup Global Markets Inc., Credit Suisse Securities USA LLC, Deutsche Bank Securities Inc., Morgan Stanley & Company, Inc., Nomura Securities International, Inc., RBC Capital Markets, LLC, SG Americas Securities LLC, and UBS Securities LLC. USCF, USO, and the individual defendants in In re: United States Oil Fund, LP Securities Litigation intend to vigorously contest such claims and have moved for their dismissal. Mehan Action On August 10, 2020, purported shareholder Darshan Mehan filed a derivative action on behalf of nominal defendant USO, against defendants USCF, John P. Love, Stuart P. Crumbaugh, Nicholas D. Gerber, Andrew F Ngim, Robert L. Nguyen, Peter M. Robinson, Gordon L. Ellis, and Malcolm R. Fobes, III (the “Mehan Action”). The action is pending in the Superior Court of the State of California for the County of Alameda as Case No. RG20070732. The Mehan Action alleges that the defendants breached their fiduciary duties to USO and failed to act in good faith in connection with a March 19, 2020 registration statement and offering and disclosures regarding certain extraordinary market conditions that caused demand for oil to fall precipitously, including the COVID-19 global pandemic and the Saudi Arabia-Russia oil price war. The complaint seeks, on behalf of USO, compensatory damages, restitution, equitable relief, attorney’s fees, and costs. All proceedings in the Mehan Action are stayed pending disposition of the motion(s) to dismiss in In re: United States Oil Fund, LP Securities Litigation. USCF, USO, and the other defendants intend to vigorously contest such claims. In re United States Oil Fund, LP Derivative Litigation On August 27, 2020, purported shareholders Michael Cantrell and AML Pharm. Inc. DBA Golden International filed two separate derivative actions on behalf of nominal defendant USO, against defendants USCF, John P. Love, Stuart P. Crumbaugh, Andrew F Ngim, Gordon L. Ellis, Malcolm R. Fobes, III, Nicholas D. Gerber, Robert L. Nguyen, and Peter M. Robinson in the U.S. District Court for the Southern District of New York at Civil Action No. 1:20-cv-06974 (the “Cantrell Action”) and Civil Action No. 1:20-cv-06981 (the “AML Action”), respectively. The complaints in the Cantrell and AML Actions are nearly identical. They each allege violations of Sections 10(b), 20(a) and 21D of the Exchange Act, Rule 10b-5 thereunder, and common law claims of breach of fiduciary duties, unjust enrichment, abuse of control, gross mismanagement, and waste of corporate assets. These allegations stem from USO’s disclosures and defendants’ alleged actions in light of the extraordinary market conditions in 2020 that caused demand for oil to fall precipitously, including the COVID-19 global pandemic and the Saudi Arabia-Russia oil price war. The complaints seek, on behalf of USO, compensatory damages, restitution, equitable relief, attorney’s fees, and costs. The plaintiffs in the Cantrell and AML Actions have marked their actions as related to the Lucas Class Action. F- 26 Table of Contents The Court consolidated the Cantrell and AML Actions under the caption In re United States Oil Fund, LP Derivative Litigation, Civil Action No. 1:20-cv-06974 and appointed co-lead counsel. All proceedings in In re United States Oil Fund, LP Derivative Litigation are stayed pending disposition of the motion(s) to dismiss in In re: United States Oil Fund, LP Securities Litigation. USCF, USO, and the other defendants intend to vigorously contest the claims in In re United States Oil Fund, LP Derivative Litigation. No accrual has been recorded with respect to the above legal matters as of June 30, 2024 and 2023. We are currently unable to predict the timing or outcome of, or reasonably estimate the possible losses or range of, possible losses resulting from these matters. It is reasonably possible that this estimate will change in the near term. An adverse outcome regarding these matters could materially adversely affect the Company’s financial condition, results of operations and cash flows. Retirement Plan The Company has a 401(k) Profit Sharing Plan (“401K Plan”) covering U.S. employees who are over 21 years of age and who have completed a minimum of 1,000 hours of service and have worked for the Company for at least three months. Participants may contribute a portion of their salary into the 401K Plan subject to certain limitations. In addition, the Company makes a safe harbor matching contribution. Company paid matching contributions of $ 0.2 million for each of the years ended June 30, 2024 and 2023 , respectively. NOTE 15. SEGMENT REPORTING In its operation of the business, our chief operating decision maker who is our Chief Executive Officer reviews revenues and profits in assessing segment performance and deciding how to allocate resources. During the periods presented, the Company reported its financial performance based on the following segments. Segment Entities Location Description Fund Management USCF Investments, Inc. United States Manages, operates and is a commodity pool operator or an investment advisor to exchange traded funds organized as limited partnerships or investment trusts that issue shares which trade on the NYSE Arca stock exchange. Food Products Gourmet Foods, Ltd. and Printstock Products Limited New Zealand Manufactures and distributes meat pies on a commercial scale in and prints specialty wrappers for the food industry in New Zealand and Australia. Security Systems Brigadier Security Systems (2000) Ltd. Canada Sells and installs commercial and residential alarm monitoring systems. Beauty Products Kahnalytics, Inc. doing business as Original Sprout United States Engaged in the wholesale distribution of hair and skin care products on a global scale. Financial Services Marygold & Co.; Marygold & Co. Advisory Services, LLC; Marygold & Co. (UK) Limited, Tiger Financial and Asset Management Ltd. and Step-By-Step Financial Planners Limited United States and United Kingdom Marygold & Co. developed a Fintech app that was launched in June 2023 and Marygold UK through its subsidiaries is an asset manager and registered investment advisor in the UK. Corporate Headquarters The Marygold Companies, Inc. United States Holding company responsible for organizational accountability, capital raising and allocation, corporate governance, regulatory compliance, etc. F- 27 Table of Contents The following table presents a summary of operating information (in thousands): SCHEDULE OF REVENUES FROM EXTERNAL CUSTOMERS 2024 2023 Year Ended June 30, 2024 2023 Revenue from external customers: Fund management - related party $ 18,965 $ 20,862 Food products 7,271 7,632 Beauty products 3,296 3,033 Security systems 2,655 2,833 Financial services 649 517 Total revenue $ 32,836 $ 34,877 SCHEDULE OF OPERATING (LOSS) INCOME FROM EXTERNAL CUSTOMERS 2024 2023 Year Ended June 30, 2024 2023 Operating (loss) income: Fund management - related party $ 4,773 $ 7,462 Food products 321 283 Beauty products ( 2,138 ) ( 285 ) Security systems 325 599 Financial services (1) ( 5,943 ) ( 3,367 ) Corporate headquarters ( 3,594 ) ( 3,272 ) Total operating (loss) income $ ( 6,256 ) $ 1,420 (1) Financial services include Marygold and Marygold UK. The amount of operating loss reclassified from “Corporate headquarters” to “Financial services” was $ 3.4 million for the year ended June 30, 2023 relative to the presentation in the prior year. The following table presents a summary of identifiable assets by geographical location (in thousands): SCHEDULE OF IDENTIFIABLE ASSETS BY GEOGRAPHICAL LOCATION 2024 2023 June 30, 2024 2023 Identifiable assets: United States $ 22,319 $ 26,625 New Zealand 3,898 3,933 United Kingdom 3,586 1,902 Canada 3,096 2,821 Consolidated total $ 32,899 $ 35,281 NOTE 16. SUBSEQUENT EVENTS The Company evaluated subsequent events for recognition and disclosure through the date the consolidated financial statements were issued or filed. As described in Note 11. Loans, the Company repaid in full the Brigadier mortgage loan of $ 0.3 million in July 2024. Other than that item, nothing has occurred outside normal operations since June 30, 2024 that required recognition or disclosure in these financial statements. F- 28 Table of Contents ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.